SFO inquiry into Barclays could turn into yet another costly disaster

OUTLOOK: The Serious Fraud Office’s inquiry into Barclays’ Middle Eastern fund raising is getting, well, serious.

Reeling from the ignominious collapse of its investigation into the property mogul Tchenguiz family, combined with budget cuts and several senior departures, the agency is in desperate need of a win.

Hence the effort being put into Barclays.

If my sources are correct, the SFO is throwing everything, including the kitchen sink and the instant coffee served to defendants, at this one.

In addition to its plans to quiz former chief executives John Varley and Bob Diamond, it has interviewed Roger Jenkins, once the head of the bank’s tax planning unit. Former finance director Chris Lucas is on this list too, in addition to everyone from the former general counsel to the woman who brought the tea and biscuits in when they were holding meetings.

Superficially you can see whey the Barclays case might look like an attractive target.

Wealthy bankers are not exactly held in high public esteem right now. Historically the size, length and complexity of fraud trials has made it difficult to secure convictions, and with enough scrutiny over enough time directed at prosecution cases “reasonable doubt” is almost inevitably established.

The scales of justice might just tip back in a prosecutor’s favour if the defendants come from a profession whose members are about on the level of MPs who cheat on their expenses in terms of the public esteem in which they are held.

Moreover if the SFO could secure a conviction of a senior banker - or any banker - for events during the financial crisis, that would be far more than any other authority in this country has achieved. All the Financial Services Authority could manage was to ban two executives from the City who already out of the game, while fining one of them (Peter Cummings) £500,000.

But the SFO is playing a dangerous game here. Those it is pursuing have the means and motivation to fight very hard against it. Any case would turn into a war that might make the year long £40m Blue Arrow fraud trial in 1992 look like a minor skirmish. That, you may remember, was labelled a “costly disaster” by the Appeal Court when it set aside the convictions of the defendants.

The Financial Conduct Authority has also been involved in the case. It would like to fine Barclays £50m over the Qatari cash call, but a dust up between the two of them is on hold until the SFO is finished with any criminal proceedings.

Operating under a civil regime, the FCA has also been looking at individuals. That’s significant because it only has to prove its case “on the balance of probabilities”.

Given that together with its previous record, the SFO might, on the balance of probabilities, have been better advised to leave its fellow agency in the driving seat.